As a researcher with a background in financial markets and stablecoins, I find Deutsche Bank’s report on the potential failure of most dollar-pegged stablecoins, including Tether (USDT), to be intriguing but also somewhat misleading. The report relies heavily on historical data of fixed currencies and draws parallels between them and stablecoins, which I believe is an oversimplification.
Tether, a leading figure in the stablecoin sector, has criticized Deutsche Bank for proposing in a recent report that stablecoins, including its USDT token, could experience a “peso crisis”-like situation. Such an event, if it were to unfold, could cause significant disruption within the crypto industry.
In a May 7 study on stablecoins, analysts from Deutsche Bank highlighted the collapse of Terraform Labs’ algorithmic stablecoin TerraUSD (TUSD) in 2022, which resulted in over $40 billion in market losses within a few days, as a reason for increasing scrutiny towards dollar-backed stablecoin offerings.
As a currency peg analyst, I’ve examined data from 334 instances of fixed currencies spanning the last 223 years. The median duration of these currency regimes was around eight to ten years. Among them, nearly half, or 49%, experienced failure during their existence.
As a researcher studying the crypto market, I have found that a large number of stablecoins, or “pegged assets,” are likely to encounter notable volatility due to speculative market forces. Eventually, some of these assets may undergo a de-pegging event, meaning they will no longer maintain their fixed value relative to traditional currencies or other assets.
As a researcher examining the landscape of stablecoins, I’ve come to the realization that while a few projects might manage to thrive, the majority are at risk of falling short. The primary reasons for this are the opaque nature of their inner workings and their susceptibility to volatile market sentiment.
As a financial analyst, I would express it this way: I’ve taken a close look at Tether from a transparency perspective, and I must admit, there are some concerns. The company has yet to provide clear information regarding its reserves. Given this ambiguity, I find myself questioning Tether’s solvency.
Tether disputed the findings of Deutsche Bank, arguing that the report was not clear and did not provide substantial evidence. Instead, it seemed to rest on imprecise claims rather than thorough analysis.
A Tether representative commented on CryptoMoon that the report trying to predict the downfall of stablecoins falls short since it lacks solid evidence to back up its assertions.
In response, Tether clarified that comparing it to Terra, a stablecoin based on algorithms, is not only incorrect but also unnecessary when discussing reserve-backed coins.
As a financial analyst, I find it intriguing to ponder the reliability of any financial institution, especially one with a past as notable as Deutsche Bank’s. Given their extensive history of fines and penalties, I can’t help but harbor reservations about their ability to pass judgment on their industry peers.
Tether has been the subject of criticism over the transparency of its reserves.
As a researcher, I’ve examined the financial disclosures made by the company, and they indicate that the organization maintains over $110 billion in reserves denominated in fiat currency. However, it is important to note that these statements are not equivalent to a comprehensive financial audit.
As a meticulous analyst, I recognize the significance of both audits and attestations in ensuring accuracy and trustworthiness in various domains. While an audit involves delving into intricacies and exploring potential issues related to data, risks, or compliance that might have previously eluded detection, an attestation serves as a more straightforward means to validate specific data at a given point in time.
In my analysis as a financial investigator in 2021, Tether faced consequences for reportedly deceiving investors regarding the extent of its reserves being secured by fiat collateral. The New York Attorney General imposed an $18.5 million penalty and prohibited Tether from operating within the state.
Although Tether, founded in 2014 by Cantor Fitzgerald under CEO Howard Lutnick’s leadership, has yet to publicly disclose an audit, Lutnick asserts his confidence that Tether holds sufficient funds.
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2024-05-10 05:02